Hong Nam-ki Emphasizes Quota Increase Agreement at IMFC... "Need to Improve Loan Accessibility for Low-Income Countries"

Hong Nam-ki, Deputy Prime Minister and Minister of Economy and Finance, is attending the 'International Monetary and Financial Committee (IMFC) meeting' held via video conference on the 8th at the Government Complex Seoul in Gwanghwamun, Seoul.

[Sejong=Asia Economy Reporter Kim Hyunjung] Hong Nam-ki, Deputy Prime Minister and Minister of Economy and Finance, attended the International Monetary and Financial Committee (IMFC) meeting and emphasized the necessity of quota increases.

According to the Ministry of Economy and Finance on the 9th, Hong attended the IMFC, held virtually the previous evening, representing the countries belonging to the Korean constituency. The Korean constituency consists of 15 countries including Korea, Australia, New Zealand, and Mongolia, with Korea and Australia alternating the director position every two years.

The meeting was attended by finance ministers or central bank governors of IMF member countries such as the United States, Japan, Germany, and China, as well as representatives from major international organizations including the Organisation for Economic Co-operation and Development (OECD), World Trade Organization (WTO), European Central Bank (ECB), European Commission, and Financial Stability Board (FSB). They discussed ▲global economic trends, ▲policy challenges, and ▲the role of the IMF in overcoming the COVID-19 crisis.

At the meeting, Deputy Prime Minister Hong emphasized the need to increase quotas to support economic recovery in low-income countries, while also mentioning support for structural reforms to enhance global financial market stability and prepare for the post-COVID era. He stated, "It is urgent to resolve liquidity shortages in low-income countries," expressing welcome for the request to concretize the general allocation of Special Drawing Rights (SDR) worth $650 billion among member countries. SDR is an international monetary unit created by the IMF, granting member countries the right to withdraw available currencies without collateral. This is to ensure the supply of global liquidity necessary to overcome the COVID-19 crisis.

Hong further stated, "Access to the current IMF lending framework for low-income countries must be improved," and emphasized, "We actively support the IMF’s efforts to reform the Poverty Reduction and Growth Trust (PRGT)." He also stressed, "It is important for the IMF to secure sufficient lending resources," and urged, "We hope for a swift agreement on quota increases through the 16th General Review of Quotas."

Regarding financial market stability, he noted, "Volatility in financial markets and cross-border capital flows may increase due to normalization of monetary policies in major countries and inflation concerns," and said, "The IMF’s institutional view review on capital flows is very timely, and Korea supports this." Additionally, he explained, "To overcome crises with comprehensive impacts like COVID-19, linkage between the Global Financial Safety Net, such as the IMF, and regional financial safety nets like the Chiang Mai Initiative Multilateralization (CMIM) is important," and added, "As a co-chair country of ASEAN+3, Korea will take the lead in supporting enhanced cooperation in surveillance and policy recommendation areas."

Furthermore, emphasizing the transition to a digital and green economy, he said, "The IMF should play a leading role in analyzing the macroeconomic impacts of the green and digital economic transition and providing appropriate policy recommendations tailored to each country’s circumstances," introducing Korea’s post-COVID structural reform cases such as the Korean New Deal.

Prior to this, member countries acknowledged that participating countries are showing rapid economic recovery due to unprecedented policy responses but shared concerns about ▲widening divergent recovery among countries, ▲resurgence of COVID-19, and ▲uncertainties related to vaccine production and distribution delays. They also pointed out expanding vulnerabilities in the financial sector, such as rapid asset price increases and surging corporate debt due to expansive fiscal and monetary policies.

As policy directions to address these issues, they emphasized strengthening international cooperation to promote vaccine production and distribution, maintaining expansionary fiscal and monetary policies, and addressing vulnerabilities in the financial sector. They also agreed on the need to raise potential growth rates and strengthen inclusive growth through climate change response and digital economy activation.

As support measures for full crisis recovery of member countries, participants proposed ▲concretizing the general allocation of SDRs, ▲supporting low-income countries through IMF lending reforms and debt relief, ▲policy recommendations reflecting each country’s economic situation, and ▲conducting the 16th General Review of Quotas.

This content was produced with the assistance of AI translation services.